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Fall 2014

The Economics of Finance

Faculty

Description

A study of the role of financial markets in the efficient allocation of resources. We look at how financial markets: (1) enable the transfer of resources across time and space; (2) facilitate the reduction and management of risk; and (3) provide information about the future, which is important to public policymakers as well as private firms and individuals. The financial theories studied include: (1) the theory of present discounted values; (2) the capital asset pricing model; (3) the efficient markets hypothesis; and (4) the Black-Scholes model for the pricing of contingent claims.